>£100k salary and funded childcare

[UncleBunclesHouse]

I hope someone with a better grasp of all this can help as I’m terrible with numbers and tying myself in knots.

I earn £150k plus bonus comes to about 180

I am able to pay over the annual allowance into pension this tax year and next due to underpayment in recent years (mat leave/phased return etc) to bring my net taxable to under £100k

Youngest DC about to turn 3, if I do this I’ll get the 30 hours, will I also be entitled to tax free childcare??

Next point is that I haven’t been doing this so far, so would take decrease in pay to the tune of I think around £800 a month. I’m not sure if I can afford it, but I really want to do it because I think the offset of childcare funding would make up some of this.

Would really appreciate hearing from someone in a similar position, all I can find about this seems to be people in the early 100k range , for which it has very little impact on take home. Over £150k it seems to affect income more?

@Soontobe60 guessing your daughter doesn't have children in nursery? Or a mortgage.

I have both and am doing everything I need to and am allowed time to in order to mitigate the outflow of money from my family. Not crass at all. It's smart

So it's ok for rich OP to cut hours to claim government funding but a poor person saying a long work commute is not viable when they can't get childcare for long hours never mind they would end up out of pocket so stay on benefits - that's despicable ?

One rule for the rich

Who on this thread has said those things?

If you have seen them elsewhere on MN, I will point out that MN has thousands and thousands of posters, and maybe 30-40 are on this thread.

@kelsaycobbles I believe in progressive tax and people with higher salaries should pay a higher percentage. I think anyone in a low income should get childcare completely free from age 2.

However, I do object to being made to pay 60% tax myself. I feel 40% would be fair.

That is a completely different argument (you appear to be having with yourself). OK to cut hours? Yes it is OK to cut my hours...reducing from a 60hr week to a 50hr week whilst still paying more tax than some people earn to spend an extra day with my child...how very dare I!!!

The issue here relates to the loss of free hours between someone earning £99k and another earning £100k. OP is simply choosing to fund her pension (with the consequence that she'll be less of a burden in her old age).

I pay around 70k income tax every year. I am a huge net contributor. If I decide to work less or divert more into my pension to make use of the tax and childcare legislation then that is my prerogative.

I don’t think those on lower incomes who are dependent on the higher level taxpayers to fund them should have the same choices. It is very different making the choice to be a bigger burden on other tax payers than it is to limit the degree to which you are a net contributor.

Oh wow I did not know that - thank you! I think if you make any payment over £10K into a SIPP then you need a letter as well.

Surely everyone manages their finances to ensure they have as much benefit from the money coming in as possible. Whether that’s not taking a job that would leave you out of pocket, or arranging your pension to minimise your tax spend? That’s just being financially efficient at whatever end of the scale you happen to be.

Not relevant to the OP , but seriously?
You think £110k is certainly not a lot when you're paying a large mortgage and a couple of lots of nursery or school fees

Large mortgage = 3.5k per month so 42k per year.

2 x school fees of 20k = 40k per year.

That's 82k from net pay.

I qualified what I said with "WHEN you're paying..."

I 💯 agree @Emm36801.
I'm in London with a large mortgage and 2 sets of nursery fees (once my mat leave finishes). Low 6figure salaries must be managed effectively. Why would anyone want to work for free? Instead i top up my pension to ensure I keep my 20% government childcare allowance. All bonuses go into pension as well.

When my salary gets to the £150k mark I'll have to find another approach.

But even with those costs income from 110k is a lot

Er how?

The take home from 110k (assuming no pension - unlikely) is circa 72k....

Why the hell not? Why should OP pay a shitload of tax to fund everyone else yet not get a benefit that everyone else does

because its INcome, not OUTgoings

I said that 110k (ie take home of 72k) isn't a lot WHEN you're paying a large mortgage and 2 x school fees (ie 82k).

That's where budgeting comes in. No point in whining that you're skint because you choose to spend a large salary on expensive things. Everyone has the option to make different financial choices.

A £110k salary is, by average income standards, 'a lot' - regardless of what you voluntarily choose to spend it on.

Oh my goodness, this is literally not how this conversation came about - it was a response to the PP saying her daughter is on over 100k but laughs at people who manage their income to under the 100k so that they qualify for free nursery hours.

I'm on quite a bit more than that and certainly don't whinge!! It was a hypothetical scenario as to why someone might pay into a pension!!

No it's very similar to the many people who understand that working more than 16 hours can impact benefits

Both are looking at minimising impact of additional work/ pay at different cut off points

Take that chip off your shoulder

Just came across this which could be useful. As it wasn't clear to me.

You subtract the grossed up amount of pension contributions to calculate your net for free childcare etc www.gov.uk/guidance/adjusted-net-income#what-adjusted-net-income-is

Now just need to figure out if the 20% to 40% extra tax relief can be claimed back in cash with self assessment, or whether it needs to go into the pension also. If anyone knows, I'd be interested to know

It's not worth it - the "free" hours are not properly free. The nursery will charge you more on top. I took the 15 hours and saved about 30% of my nursery bill (5 days a week)